The crying game.

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Making Babies Makes a Comeback

Noah Smith is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
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According to blogger Ana Swanson of the Washington Post, and many other bloggers around the Internet in the past week, Japan’s government has been engaged in rosy, optimistic denial over its falling fertility rate. Swanson writes:

The data...shows just how bad Japan has been at forecasting its fertility rate since 1965. Government projections have been almost comically wrong, as the government repeatedly interpreted the sharp decrease in the fertility rate as a temporary dip rather than a sustained trend.

There’s only one problem: The data show the exact opposite! Here is the graph, which draws on data from a recent paper by some Japanese economists: 

Yes, Japan’s government mistakenly forecast that fertility would bounce back…until 1997. Somewhere around the turn of the century, the government wised up, and realized that the fertility rate was not about to bounce back. If you look at the graph -- as many of the pundits heaping scorn on Japan’s government apparently did not -- you will see that the forecasts have been too pessimistic for more than a decade now. Fertility rates bottomed out at 1.26 children per woman in 2005, and have been rising since -- despite the sharp recession and natural disasters that happened in the meantime. The modest rise has been sustained, and the fertility rate has bounced back to 1.43 in 2013 -- a 13.5 percent rise from its low.

Now, a 13.5 percent rise isn't going to save Japan from a baby bust -- the rate would have to rise by an additional 47 percent in order to reach replacement level, the level that generates long-term population stability. Population decline has already set in, causing economic and social difficulties.

But the slight rise is encouraging, and hints that falling fertility might not be an inescapable death sentence for developed countries.  Japan’s experience is part of a trend that has been appearing all across the rich world in the last few years -- fertility is rising a bit. The first study to discover this intriguing phenomenon was published in 2009 in Nature by demographers Mikko Myrskylä, Hans-Peter Kohler and Francesco Billari. They write:

Here we show, using new cross-sectional and longitudinal analyses of the total fertility rate and the human development index (HDI), a fundamental change in the well-established negative relationship between fertility and development as the global population entered the twenty-first century. Although development continues to promote fertility decline at low and medium HDI levels, our analyses show that at advanced HDI levels, further development can reverse the declining trend in fertility. The previously negative development–fertility relationship has become J-shaped, with the HDI being positively associated with fertility among highly developed countries.

Japan was one of the only exceptions they found. Now, it too has joined the trend. In some countries, such as France, Sweden and Norway, fertility has almost climbed back to replacement levels, after dipping far below it for decades. In the U.S., fertility briefly surged above the replacement rate for a few years before drifting back to just underneath it. And in New Zealand, fertility is now at the replacement level.

So rich countries are not quite out of the woods as far as low fertility goes, but the data show that there is hope of attaining population stability.

What has caused the rise in developed-world childbearing? It might have to do with changing gender roles and the changing nature of work. In 2002, economists Henriette Englehardt and Alexia Prskawetz reported that a number of studies had found an interesting shift. Before 1985, there had been a negative correlation between female labor-force participation and fertility rates in rich countries -- in other words, when women went to work, couples had fewer kids. But after 1985, the correlation reversed  -- now, the countries where more women worked had more kids than the countries where women stayed home!

What happened? No one knows, but the authors offer some hypotheses, supported by a bit of evidence. First, rich countries with more flexible work arrangements -- in other words, better work-life balance -- seem to have higher fertility. Second, rich countries with less traditional marriage arrangements (think: Sweden and France) tend to have more kids. And third, government subsidies for child care probably increase childbearing.

These hypotheses are tentative, but they suggest that what happened is that some rich countries managed to modernize their notions of gender, family and work to fit the new realities of industrialization and the service economy. By refusing to make either women or men choose between work and home life, they allowed two-earner families to shift to a more egalitarian, cooperative, flexible style of child-rearing. That encouraged people to have more kids.

Countries such as Japan, Germany, South Korea and Italy, where gender roles and work schedules are more rigid and traditional, have suffered the curse of persistent low fertility. No wonder Japanese Prime Minister Shinzo Abe is so anxious to implement “Womenomics” and reform the labor system in Japan. Otherwise, his country will run out of people.

So why the uptick in Japanese fertility since 2005? Well, work-life balance may be the story here too. Japanese people, famous for working long hours, have worked steadily less since 1990:

If gender equality and more flexible work schedules can be added to the social revolution, expect the bounce in fertility to persist -- and upstaging those pessimistic government forecasts. And as for the U.S., the recent drop in fertility to below-replacement levels might be a sign that it’s time to emulate Sweden and France, and increase government support for day care and other child-rearing expenses.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Noah Smith at nsmith150@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net